1.) What type of unemployment can still exist at \"full employment\" A.) Cyclica

Question

1.) What type of unemployment can still exist at "full employment" A.) Cyclical B.) Frictional C.) None FOR QUESTIONS 2-4: Assume the US can produce 30 barrels of oil OR 15 tons of wheat, while Canada can produce 50 barrels of oil OR 20 tons of wheat 2.) What is the opportunity cost ratios (oil to wheat) for each country? 3.) If Canada and the US are trading, who will be exporting OIL? 4.) What can the importing nation do to encourage oil production (if it chooses)? A.) Increase tariffs on oil B.) Impose an Oil import quota C.) Either 5.) When BASEL III increased reserve requirement ratios for banks from 6% to 9%, what happened to the money multiplier in affected countries? A.) It Fell B.) It rose C.) It had no effect

Explanation / Answer

(1) (B)

Full employment level of unemployment consists of frictional and structural unemployment.

(2)

Opportunity cost (OC) of wheat are computed as follows.

In US, OC of wheat = 30/15 = 2 oil per wheat

In Canada, OC of wheat = 50/20 = 2.5 oil per wheat

(3)

Since US can produce wheat at a lower OC than Canada can, US has comparative advantage in and export wheat. Therefore Canada has comparative advantage in and will export oil.

(4) (C)

Both A tariff on imported good on a quota on the imported good increase domestic price, encouraging domestic producers to increase domestic quantity supplied.

NOTE: As per Chegg answering guidelines, first 4 questions are answered.

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